credit policy
Borrowing terms framework
Credit policy is the set of guidelines a lender or business uses to decide who gets credit, how much, and on what terms.
Banks establish credit policies for loans; retailers set them for store accounts.
A tight credit policy requires strong qualifications; a loose credit policy accepts higher risk.
The term also applies to a nation's approach to monetary lending: The central bank's credit policy aims to control inflation.
- payment historyRecord of past transactions
- payment scheduleTimetable for installments
- creditworthinessAbility to repay debts
- overdue noticesAlerts for unreturned items
- red flagsIndicators something's wrong
bad debt · write off · grace period · interest rates · stress testing · financial statements · cash flow · installment plans · penalty fees · fraud detection · debt-to-income ratio · loan approval · economic indicators · repayment terms · creditworthy · contingency planning · collection agency · fine print
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